17 November 2009 17:20 [Source: ICIS news]
By Nigel Davis
Yet, as Cefic pointed out on Tuesday, the production data are beginning to demonstrate recovery, not simply surveys of business confidence.
The improved outlook in
Cefic still feels that chemicals output in
The forecast is for further recovery but at what is called a “cautious” pace. It is encouraging that the trade group does not see any “double dip” setback, although it reckons 2010 will be a “year of transition”. In the circumstances, that is probably not too bad, but underlying the forecast and the prognosis on the patient is the still-low level of output, which remains miserable compared with the industry peak in the first quarter of 2008.
The numbers will look better in 2010 as comparisons are made with a particularly difficult early part of 2009. The industry in
But it is the opportunities that companies are taking, to lift volumes on the one hand and to cut, largely organisational, costs on the other that will mark them out during the upturn.
The American Chemistry Council’s (ACC's) economic report late last weak noted that the global recovery alongside the weaker US dollar and lower natural gas costs had boosted exports. Thermoplastic resin exports from the
The North American markets are recovering if stronger railcar loadings are a guide. But, the ACC notes, the exports share of production has doubled over the past five years. These sales have provided much needed support for domestic producers.
It is the breadth rather than the strength of the recovery that is encouraging and, with still-strong growth in
“Overseas, it is becoming more apparent that a broad-based recovery has emerged,” the ACC said. Industrial production (IP) in the EU has rebounded and accelerated to a 16.1% gain in October. In some of the East Asian economies IP growth has turned positive year on year.
Industry executives have understandably been cautious in such circumstances and even the most upbeat have not talked freely about or admitted that they are banking on a recovery in 2010. The credit crisis and the downturn, however, have changed the face of many markets. Producers and consuming companies are working with much lower stock levels.
There are concerns that there could be a stop-and-go recovery in chemicals as pressured companies seek to re-stock but find it difficult to do so.
Consultants DeLoitte pointed out this week that in some instances the location of demand has shifted and companies are having to deal with different customers. Emerging from the recession, companies will find themselves on a steep learning curve.
That learning process will prove positive for some but not for all. Markets are improving but the pressures on cash flows largely remain.
The data collected by Cefic and the ACC are turning more positive and painting a prettier picture, but there is a great deal of caution in the wind.
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